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HomeMy WebLinkAbout04.b. Review draft Position Paper to authorize the General Manager to increase an existing Support Services Contract with EMTEC Consulting Services LLC in an amount not to exceed $350,000 for ongoing system support of the Enterprise Resource Planning RepPage 1 of 3 Item 4.b. DCENTRALSAN MEETING DATE: MARCH 1, 2022 BOARD OF DIRECTORS POSITION PAPER DRAFT SUBJECT: REVIEW DRAFT POSITION PAPER TO AUTHORIZE THE GENERAL MANAGER TO INCREASE AN EXISTING SUPPORT SERVICES CONTRACT WITH EMTEC CONSULTING SERVICES LLC IN AN AMOUNT NOTTO EXCEED $350,000, INCREASING THE COST CEILING TO $750,000 FOR ONGOING SYSTEM SUPPORT OF THE ENTERPRISE RESOURCE PLANNING REPLACEMENT, DISTRICT PROJECT8250 SUBMITTED BY: INITIATING DEPARTMENT: JOHN HUIE, INFORMATION TECHNOLOGY MANAGER PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION ADMINISTRATION DEPARTMENT- IT ISSUE At the November 19, 2020 Board meeting, the Board approved a contract in an amount of up to $400,000 with Emtec Consulting Services, LLC related to the Enterprise Resource Planning (ERP) post go -live support over a three-year period. Actual support needs have been higher than anticipated. Authorization is required to increase the support contract by an amount not to exceed $350,000 over the same three-year period. BACKGROUND While all major modules of the ERP system have been launched and are being utilized by staff, there are still significant areas where both minor fixes, and improvements will continue to be needed. This includes fine-tuning of Oracle system configuration, as well as working with staff to determine the best way to utilize the system to best meet the needs of Central San. This contract is billed quarterly based on the actual hours of services utilized. Over each of the past four quarters, Central San has exceeded the anticipated number of hours contemplated in the original contract. This has happened for the following reasons: • Required assistance with end -of -year processes. • After launching the system, staff has continued to find ways to improve the way that Oracle software is utilized, requiring additional system reconfiguration. • The Oracle system has been more difficult to use than anticipated. • Staff has requested additional resources to ensure that they know how to properly utilize the various modules. March 1, 2022 Regular ADMIN Committee Meeting Agenda Packet - Page 6 of 58 Page 2 of 3 The total spending on this contract during the first year was approximately $335,000. At this rate, the contract will be fully depleted before the end of April of this year, which would leave Central San with more than 18 months without a support contract. If there are no further quarterly overages, then the minimum additional funding required to continue with the originally planned level of support would be approximately $215,000 for the remainder of the three-year period. Based on the current usage levels, staff anticipates further increased support costs in the near term. The expectation is that the number of support tickets will continue to decline as staff become more comfortable with the software and how the system is configured. However, the required support anticipated remains higher than what was originally planned. Central San staff are closely monitoring all support tickets to ensure that they are necessary and helpful for improving Central San business processes. This is to ensure that all costs are tracked and controlled over time. Staff has also closely monitored the tickets to ensure they are appropriate to be charged to this after go -live support contract rather than covered under the initial ERP implementation contract with Emtec. To that end, adjustments have been made in the amounts billed thus far to properly classify the time billed by E mtec. Staff is requesting the additional $350,000 to provide for the previously mentioned $215,000 baseline support as well as $135,000 to provide a buffer of hours to account for anticipated future overages based on current ticket trends. This contract is funded through Operations & Maintenance (O&M) expenditures, and will be budgeted in the proposed FY 2022-23 Information Technology budget. ALTERNATIVES/CONSIDERATIONS There is not a realistic short-term alternative to procuring support for the ERP via a third party. Other vendors are possible, but it is most efficient to use the vendor that implemented the system. Central San did procure some additional support directly with Oracle for a cost of about $50,000 per year, but this is more limited in scope than the support Emtec provides. In the mid to longer term, Central San Information Technology staff will be able to take on some additional support activities as they learn more about the Oracle Cloud ERP product, receive additional formal training, and as the initial issues after go -live are further resolved. FINANCIAL IMPACTS Funding for the ongoing support will be charged to and addressed within the O&M budgets. Funding for this increase was not included in the Fiscal Year (FY) 2021-22 adopted budget, but the amount will be funded from savings elsewhere in the budget. The FY 2022-23 budget will be proposed to cover the additional costs. COMMITTEE RECOMMENDATION The Administration Committee reviewed this matter at its meeting on March 1, 2022, and recommended March 1, 2022 Regular ADMIN Committee Meeting Agenda Packet - Page 7 of 58 Page 3 of 3 RECOMMENDED BOARD ACTION Authorize the General Manager to increase an existing support services agreement with Emtec Consulting Services LLC in an amount not to exceed $350,000, increasing the cost ceiling to $750,000 over the existing three-year contract. Strategic Plan re -In GOAL THREE: Fiscal Responsibility Strategy 2 — Ensure integrity and transparency in financial management GOAL SIX: Innovation and Optimization Strategy 2— Improve and modernize operations through technology and efficiency measures March 1, 2022 Regular ADMIN Committee Meeting Agenda Packet - Page 8 of 58